Last week, Medtronic agreed to pay $75 million to resolve allegations of Medicare fraud. The suit, originally brought under the qui tam provisions of the False Claims Act, alleged that Kyphon, a Medtronic subsidiary, defrauded Medicare by improperly persuading hospitals to keep patients overnight for simple outpatient procedures to repair small fissures of the spine. This fraudulent conduct resulted in Medicare reimbursing hospitals up to $10,000 per procedure when patients were recovering within a few hours, leading to losses of millions of dollars for the Medicare program. The two whistleblowers who exposed the fraud will receive a total of $14.9 million as their relators’ share of the settlement proceeds.

Principal Jason Zuckerman of the The Employment Law Group® Law Firm is quoted in an article in BNA’s Daily Labor Report titled “Whistleblower Retaliation Cases Increase; Law Still Developing,” about recent decisions concerning the whistleblower retaliation provision of the Sarbanes-Oxley Act. Zuckerman was a panelist at a May 19, 2008 seminar on whistleblower retaliation law, at which Zuckerman discussed new laws protecting whistleblowers in the financial services, defense contracting and transportation industries, and the scope of protected conduct under various whistleblower retaliation laws, including the False Claims Act.

On May 13, 2008, the Sixth Circuit reversed a lower court’s dismissal of a False Claims Act (“FCA”) retaliation claim. In the U.S. ex rel. Marlar v. BWXT Y-12, LLC, No. 07-6051 (6th Cir. May 13, 2008) opinion, the Sixth Circuit rejected the district court’s narrow interpretation of the scope of protected conduct under the False Claims Act, holding that a plaintiff need not demonstrate that her disclosures clearly alerted management that she intended to pursue a qui tam action.

The district court held that Marlar did not engage in protected conduct under the retaliation provision of the False Claims Act in that her disclosures did not alert her former employer that she intended to bring a qui tam action. The Sixth Circuit reversed, holding that Marlar’s disclosures to management about BWXT receiving “illegal” “large incentive payments” under its contract with DOE “would have given [the defendant] reason to believe that she was contemplating a qui tam action,” and therefore she could prove that she engaged in protected conduct.

On April 23, 2008, the House passed Congresswoman Maloney’s bill, H.R. 3033 (“Contractors and Federal Spending Accountability Act”) with a voice vote, to put a stop to contractors defrauding the government. This legislature requires the Administrator of General Services to establish and maintain a database of contractor violations of federal procurement laws. Currently, the Project on Government Oversight (POGO), a nonprofit organization that investigates fraud and abuse in all federal agencies, maintains a database of contractor misconduct, which is available here. The companion bill in the Senate is S. 2905. To date, the Senate has read the companion bill twice and has referred to the Committee on Homeland Security and Governmental Affairs.

Jason Zuckerman, a principal of The Employment Law Group® law firm is quoted in an article titled “Fallout from FBI investigation intensifies call for reform at OSC.” In the article, Zuckerman offers suggestions for improving the effectiveness of Office of Special Counsel, including:

• Providing additional resources to enable OSC to investigate the thousands of whistleblower disclosures it receives from federal employees each year.
• Creating an independent panel to investigate the causes of OSC’s non-compliance with their statutory duties and making recommendations to reform OSC.
• Increasing transparency by requiring OSC to report on the findings of its investigations, as required by 5 USC 1214 (e).

The Employment Law Group® law firm routinely represents federal employees in whistleblower retaliation actions and discrimination actions against federal agencies.